The fact is that despite the movie and games industries bemoaning rampant and uncontrolled piracy of their products, both industries are burgeoning. The movie industry is “suffering” under record revenues, and the games industry revenues have grown more than 300% in the last decade (to more than double that of the movie industry).
And yes, rampant and uncontrolled piracy is happening – yet the industry is getting more money over the counter than ever before. It’s difficult, then, for the industries to show how much they’re being hurt. Would their record revenues be higher? By how much? Nobody knows the answer, but thanks to France, we can take a guess.
You see, back in 2010, France introduced stiff anti-piracy legislation that (after a bit of a rocky start in its early months) reduced online piracy by a whopping 66%. How, you might ask, did this affect sales?
Financial reporting from games-publishers often makes for interesting reading. Almost always, you’ll see things quoted like “non-GAAP earnings”, and “non-GAAP net sales” and so on, accompanied by some substantially large dollar figures.
So, what actually is GAAP reporting? Well, there are two major systems of financial reporting. One is the International Financial Reporting Standards (IFRS), and the other is Generally Accepted Accounting Principles (GAAP) which is used in the USA. GAAP is a collection of rules and principles about how a company reports its income, sales, losses, assets and overall financial operations.
The principles of GAAP are: regularity, consistency, sincerity, permanence of methods, non-compensation, prudence, continuity, periodicity, Full Disclosure/Materiality, and Utmost Good Faith.
So, what’s non-GAAP reporting? Well, non-GAAP reporting pretty much means that one or more of those principles isn’t being observed.